Forecast Calls For Vultures – Bararsani Case Settled

Thanks to reader Aileen Kane (who is one of you — the best informed readers in real estate) I just got word (via a comment on an old post) that the final settlement in Coldwell Banker v. Bararsani case has been ordered by the court. From Law360 (registration required):

Los Angeles Superior Court Judge William F. Highberger granted final approval Wednesday to the class action settlement between Coldwell Banker Residential Brokerage and named plaintiff Ali Bararsani. The court also conditionally certified the class of approximately 5,600 known members and approved setting aside $1.5 million from the $4.5 million settlement for class counsel attorneys’ fees and reimbursement of more than $25,000 in costs.

Do some rough math and you get to the idea that the 5,600 known members of the class action lawsuit will receive about $535 each. But the big number you need to pay attention to is the $1.5 million that the lawyers in this case will get.

As is typical in a settlement like this, both the plaintiff (Bararsani, et.al.) and the defendant (Colwell Banker) will save face. The plaintiff thinks he’s got a real case, that the claims have real merit, etc. Coldwell Banker, of course, denied any wrongdoing, denied any liability, and said it “is not obligated to change its business structure.”

But of course, Coldwell Banker did write out a check for $4.5 million now didn’t they?

This settlement order came down on Jan 13th; I wish it had happened before I had written my Seven Predictions, because I’ve got another one to make now. 🙂

If Coldwell Banker believes that this settlement ends the “two and a half years of litigation” and allows them to put the issue behind them… I have news for them. And if you’re a non-CB broker chortling at their misfortune, I got news for you too.

Every plaintiff’s attorney in the U.S., especially those experienced in class action lawsuits and going against the high-priced legal talent of major companies like Realogy (Coldwell Banker’s parent company), is now looking for current and former REALTORS to bring class action lawsuits in all 50 states. And those actions won’t be limited to CB; any brokerage that used independent contractors (that would be every single one) is now vulnerable to the exact same claims as Bararsani brought against CB. You could be small, you could be large — you’re vulnerable to at least getting sued because the claims will be identical.

So I am now predicting that we will see a flurry of litigation around the country against large real estate companies by a swarm of lawyers seeking a pay day. Because lawyers have newsletters. And blogs. And conferences where they network and talk and share stories. In fact, they have an Association and litigators make up a big chunk of the ABA. The pattern in the past has always been that one lawyer gets a significant settlement, the others see the payday, they smell blood in the water, and then the swarm attacks begin. It’s happened to asbestos, to tobacco, to drug companies, etc. etc. So… it’s going to happen. It’ just a matter of time.

A real, binding opinion from a significant court that rules definitively one way or the other. Monell didn’t do this; it used some rather tortured legal reasoning to reach its conclusion, but then begged somebody to bring a new lawsuit alleging that real estate agents are employees even under real estate licensing laws. Obviously, the court here didn’t rule because the parties settled instead. Or,

Legislation that spells out clearly that real estate agents are not employees. That legislation can’t leave doubts about the issue, as the California and Massachusetts statutes do. Given the power of unions in the public sector, the likelihood of that kind of legislation passing is only slightly better than me being named as the next CEO of NAR.

Ergo, the forecast calls for stormy weather and vultures. Lots of them.

We now return you to your regularly scheduled programming on how to use Facebook and Instagram to get buyer leads!

Managing Partner of 7DS Associates, and the grand poobah of this here blog. Once called "a revolutionary in a really nice suit", people often wonder what I do for a living because I have the temerity to not talk about my clients and my work for clients. Suffice to say that I do strategy work for some of the largest organizations and companies in real estate, as well as some of the smallest startups and agent teams, but usually only on projects that interest me with big implications for reforming this wonderful, crazy, lovable yet frustrating real estate industry of ours.

3 Comments

Join the discussion and state your opinion. Some comments may be held in moderation. I try to get to them as soon as possible, but may be traveling or unable to approve comments immediately. I do not censor comments, but reserve the right to remove anything that looks like spam, trolling, or just outright inappropriate.

The matter of the classification of IC’s v. employees is just one of a long list of strange business practices that now defines the business of residential real estate brokerage. Talk to anyone in business and they will tell you. What would Mercedes Benz say if the DOJ and FTC demanded that MBZ must permit the KIA dealer to sell Mercedes Benz vehicles and that MBZ must pay the KIA salesperson 50% of the sales commission? Or if by simply joining the National Association of Automobile Dealers any licensed car dealer who was a member would have access to any other dealer’s inventory to advertise and sell? Still in denial? Just propose this business arrangement to one to your local auto dealers. And then stand back. Explosion of uncontrollable laughter to result. Let’s face it. The competitive dynamic of the residential real estate brokerage industry has been literally neutered by the intervention of the rules, policies and standard practices of all membership organizations. These organizations plague this business with their quest for only one thing – more and more members. The true objective of the NAR? I am convinced that it is to have a Realtor in every home. And then there’s the on-going plight of the consumer in search of a decent and predictable real estate experience. Not enough “ink” here for the full discussion of that one.

Ken – I am a sole broker – no agents – and I agree with you 100%. I feel the changes will not occur until banks get permission to own brokerages.
Then, the old slavery model of independent contractors will be a thing of the past.

As long as Brokers dictate minimum commissions to be charged Sellers, there are no Independent Contractors except Brokers of Record. And real Brokers of Record, not
“Rent-A-Brokers” or “Ghost Brokers” that only substitute for unlicensed office owners or Salespeople who own offices and want to shift liability.
If Salespeople want to be real ICs, get your Broker’s license and be all you can be. And not an “Associate Broker” who is just a Salesperson.